Offshore Outsourcing is the practice of hiring an external organization to provide the office infrastructure to allow you to perform some business function in a country other than the one where your product or service is delivered or manufactured (“Offshore). It can be contrasted with “Offshoring” in which a company moves itself entirely to another country, or where functions are performed in a foreign country by a foreign subsidiary.
Opponents point out that the practice of sending work overseas to countries with lower wages reduces their own domestic employment and domestic investment. There is very little evidence to support this; in fact there is much evidence that by doing so many new higher paying jobs are created along with significant new investment which stimulates growth.
Many customer service jobs as well as jobs in the the IT sectors (data processing, computer programming, and technical support) in countries such as the United States and the United Kingdom - have been or are very successfully Offshored.
Criteria for roles that can be successfully Offshored
The general criteria for a job to be offshore-able are:
- There is a significant wage difference between the original and offshore location;
- The job doesn’t require “Face to Face” time
- The work has a high information content
- The work can be carried out over a WAN (wide area network);
- The work is doable remotely
The driving factor behind the development of offshore outsourcing has been the need to cut costs while the enabling factor has been the global electronic internet network that allows digital data to be accessed and delivered instantly, from and to almost anywhere in the world.